Bank of Japan Governor Ueda says massive stimulus had negative side effects

Bank of Japan Governor Ueda comments crossing again:

• Negative rate and bother tools under BOJ’s massive stimulus had
  boosted demand by pushing down real interest rates, but had
  side-effects too such as on JGB market function

• Preliminary wage negotiation outcome tends to be revised down but
  even so, we thought final outcome would be fairly strong number

• Consumption was showing some weakness but we were able to confirm
  strength in capex, when asked why boj decided to end negative rates
  in March not April
• We know some small
  firms might struggle to hike wages, but overall, small, midsized
  firms’ profits are improving
• As we end our
  massive stimulus, we will likely gradually shrink our balance sheet,
  and at some point reduce jgb purchases
• At present, we have
  no clear idea on timing of reducing JGB buying, scaling back size of
  balance sheet
• We will take plenty of time examining how to reduce BOJ’s ETF holdings

• In event of reducing BOJ’s ETF etf holdings, BOJ will come up with
  guidelines taking into account market developments at the time
• In selling BOJ’s ETF
  holdings, we will do so in a way that minimises losses on BOJ,
  disruptions in markets

Meanwhile,
Japan Chief Cabinet Secretary Hayashi:

• Closely monitoring
  fx moves with urgency

• Important for currencies to move in stable manner, movement
  reflecting fundamentals

• Closely watching the impact on Japanese and global economy after the
  Federal Reserve decision

Hayashi

This article was written by Eamonn Sheridan at www.forexlive.com.